Process of Collective Bargaining: Key Stages & Negotiation Steps

Collective bargaining is the discourse through which representatives of workers bargain with representatives of an employer to arrive at an agreeable written agreement regulating terms and conditions of employment between the two parties: employees and employers. This takes place by means of exchange of proposals, thoughts, and even solutions between parties with the aim of reaching a mutual understanding. Collective bargaining is a process by which the employer and union exchange proposals, exchange ideas, solve problems together, and come to a written agreement. Bargaining most often takes place when a contract that already exists is about to expire. The workers in every firm have to follow the rules. These apply even when they go against any decision. Abrupt protests can only make things worse for both parties. That's why the collective bargaining process is a vital method. It provides ways and theories which workers may use. They can sit down and discuss with the management. There can be several instances where workers have different preferences than the management. The employees often don't have much power when they oppose such policies individually. They can get together to bargain. This negotiation process promotes a better environment in the firm.

UGC NET aspirants should understand that the process of collective bargaining empowers employees through negotiation..The methods of collective bargaining are an essential study. It applies to several situations where workers use the collective bargaining process. The UGC NET Commerce Exam covers both these topics.

The article below covers the following:

• What is Collective Bargaining?
• Process of Collective Bargaining
• 5 Stages of Collective Bargaining
• Methods of Collective Bargaining
• Comparison Table: Methods of Bargaining
• Objectives of Collective Bargaining
• Examples and Case Studies on Collective Bargaining

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What is Collective Bargaining?

Collective bargaining is where a group of employees, such as those in a union, negotiate with their employer regarding issues such as compensation management, work conditions, and benefits. The employees seek to ensure they are being treated justly and receiving what they require for their job. The employer and the representatives of the employees sit down to discuss and negotiate the fairest arrangement for both parties. If both agree, they create a new contract that everyone adheres to. It's similar to coming together to solve the problem and make everyone content. At its core, the process of collective bargaining brings together employer and employee representatives to resolve workplace concerns

Fig: process of collective bargaining

The process of collective bargaining includes organized stages that facilitate productive negotiation. The collective bargaining process details the steps or stages. It helps the workers and the union to have a plan. They understand the strategy better and create goals. This process is necessary for a successful agreement that covers the issues. The union cannot present their arguments if it does not understand the collective bargaining process. Read below the different stages 

5 Stages of Collective Bargaining

Outlining the whole process of collective bargaining brings out the stages in which employers or their representatives negotiate with employees or their representatives over terms and conditions of employment as they try to reach a fair agreement. An understanding of the stages of collective bargaining-from preparation to settlement-is crucial for the purposes of conducting fruitful dialogues, avoiding disputes, and establishing a level playing field in the industrial relationship.

Step 1: Bargaining Preparation 

The first step in the process of collective bargaining is selecting an ideal team that will represent various employee issues The union may have several members who represent many issues. It can have experts for wages, hours, compensation management, etc. related issues. The ideal team selection happens first. The union often has laws that guide this selection process. The selected members are thus the ones who discuss and negotiate with the management. They prepare the issue and the report. It happens after taking in statements and views of different stakeholders. These include talking to the different workers and company managers. They check the proposal and revisit it to decide where they may do better.

Step 2: Conducting Negotiations 

The next round begins with the core collective bargaining process. The unions and the managers engage together in negotiations. They both present sides. The sides include the rights of employees. They can target laws and basic necessities. The company also presents its argument for the policy. It can include employee performance or economic conditions. These discussions happen over several rounds. Both must show mutual respect and negotiate to reach an agreement. The proposal thus faces changes and modifications as per the discussions. At this stage of the process of collective bargaining, both sides exchange proposals with the intent to reach a compromise

Step 3: Contract Ratification 

The negotiations lead to a new agreement. The collective bargaining process includes all the workers. The new proposal reaches the union members. They often have a vote where the workers may reject or accept it. It includes an assessment of the new terms by all parties. The proposal returns to the negotiation stage if the members reject it. The terms will apply if the members accept that agreement.This step in the process of collective bargaining ensures that employees have a direct say in the approval of negotiated terms

Step 4: Contract Dispute

The parties may not reach a stage where both accept it. When parties reach an impasse during the process of collective bargaining, strikes and arbitration may occur. The further steps relate to when there are disputes. The workers may halt work and strike. They can protest. The company may also find a negotiator who resolves the issue for both. Either way, this collective bargaining process stage often increases the time.

Step 5: Contract Settlement 

The final terms come up as the parties renegotiate. They end the strikes and reach the middle ground. The specific clause or the contract's final settlement happens. Both parties agree to the same and sign the contract. It leads to new terms that are enforceable.Concluding the process of collective bargaining, the contract is signed and implemented, legally binding both parties

Methods of Collective Bargaining 

Once the process of collective bargaining is understood, it is essential to explore the diverse methods used in practice. Collective bargaining may occur in various forms based on how employees and employers choose to communicate and negotiate. The methods assist both parties in reaching a consensus regarding matters such as compensation, working hours, and safety.

Distributive Bargaining

Distributive bargaining is when both parties attempt to get as much as they can, also referred to as a "win-lose" scenario. The employees may desire more pay, whereas the employer desires minimal expenses. Both sides plead for what they believe is equitable and attempt to achieve the best possible outcome for themselves. This process is similar to a game where only one party can be a winner.

Integrative Bargaining

Integrative bargaining is where both parties sit down and compromise to create something that suits everybody, which is sometimes referred to as a "win-win" solution. Employers and workers discuss their demands and attempt to think of solutions that are unique. For instance, if the workers need extra holidays, then the employer may propose flexible work hours. Through this approach, both parties feel that they are receiving something favorable.

Concessionary Bargaining

Concessionary bargaining occurs when one of the parties, often the workers, is willing to sacrifice something for the good of the company. This might be workers accepting reduced wages or benefits so the company can survive. It's most commonly performed when the company is going through bad times and can't afford everything. It's done to ensure everyone is able to remain at work despite it being tough.

Productivity Bargaining

Productivity bargaining is when the two parties decide to enhance working conditions or procedures in order to maximize the amount of work being accomplished. If the workers are doing more work in less time, the employer can reward them with improved wages or benefits. This approach aims to make the workplace more efficient and enable the business to expand. It benefits both parties because employees receive rewards, and business owners receive improved output.

Comparison Table: Methods of Bargaining

Collective bargaining can take several forms depending on the goals, strategies, and conditions of both employees and employers. Below is a comparison of the four primary methods of bargaining—each with its distinct approach and ideal use case.

Objectives of Collective Bargaining

Collective bargaining is the process that seeks a contractual agreement between both sides of the term vis-a-vis employmentality and representatives of the workers and their employers. This narrows the scope of grievances and establishes a system of clearing debt repayments to employees while promoting the company interests.

Improving Working Conditions

One of the objectives of collective bargaining is to improve the work environment and working conditions of employees. Employees can request improved safety equipment, a cleaner workplace, or more favorable safety policies. The workers and employer sit down to ensure all are safe and content. This makes the workers feel secure in the workplace.

Improved Wages and Compensation

A second goal is to ensure employees are paid equitably and have benefits such as health insurance. Employees and employers negotiate the amount of money fair for the work performed. Employees may also demand items such as additional time off for vacation or for being sick. The aim is that employees should be appreciated for their labor. Job security improves substantially when the process of collective bargaining leads to formal employment agreements.

Job Security

Collective bargaining makes employees feel safe in their employment. Employees can negotiate to ensure they cannot be dismissed without a valid reason. Job security provides employees with peace of mind that they will not lose their jobs suddenly. This makes the workplace stable for all.

Resolving Conflicts

One such goal is to address the issues and prevent misconceptions by employees and employers. Collective bargaining provides both sides the opportunity to negotiate over issues such as unfair treatment or disputes over regulations. Instead of going to war, they can strike win-win deals. Thus, it leads to the establishment of a peaceful and fair work environment.

Examples and Case Studies on Collective Bargaining

Understanding the collective bargaining process becomes clearer when viewed through real life examples of the case study that these processes put forth under how negotiations between workers and management can either lead to positive resolutions or escalate into conflict when not effectively handled. The following examples, from India and abroad, demonstrate how the different stages and methods of collective bargaining come into play.

Case 1: Maruti Suzuki Strike (India, 2011-2012)

• Workers at Maruti Suzuki's Manesar plant demanded recognition of a new union, better working conditions, and reinstatement of dismissed workers.
• Collective Bargaining Method Used: Distributive and Concessionary Bargaining
• Outcome: The strike turned violent, causing a huge loss of production and dismissals of employees. After a series of negotiations and mediation by the government, only a partial settlement was reached and, in addition, the company had instituted severe disciplinary actions.
• Lesson: Lack of early-stage dialogue and mutual respect during negotiations can lead to failed bargaining and unrest. Due to the absence of a structured process of collective bargaining, tensions escalated during the Maruti Suzuki strike

Case 2: Tata Steel-Employee Council Agreements 

• Tata Steel has had an age-old agreement with the employee union concerning bonus payments, safety policies, and working conditions. 
• Collective Bargaining Method Used: Integrative and Productivity Bargaining
• Outcome: Tata Steel ensures a participative approach of its workers to decision-making within a cooperative relationship. Annual productivity-linked bonuses are negotiated based on performance goals mutually agreed upon.
• Lesson: Proactive, inclusive collective bargaining fosters trust and helps align employee welfare with company performance. 

Case 3: General Motors (USA) - UAW Negotiations (2019) 

• The United Auto Workers (UAW) union staged a nationwide strike for health benefits, wages, and job security of temporary workers. 
• Collective Bargaining Method Used: Distributive Bargaining 
• Outcome: After a two-party, forty-day strike, GM acceded to wage and benefits increases for temporary workers. 
• Lesson: Even confrontational bargaining can be favorable terms when underpinned by solidarity and discipline of negotiation. 

These examples illustrate how collective bargaining works from sector to sector and geography to geography. Whether cooperative or confrontational, what matters is that there is some structure to the negotiations and that everybody respects each stage of the process.

Conclusion 

The collective bargaining process is vital for a democratic system. The workers can voice their issues. They don't have to accept any terms that harm their livelihood. It leads to a better power balance in that industry. Also, companies can use such discussions to understand what the employees need. They can create better policies which focus on everyone's growth. It leads to a better environment. There will be lower disputes. The company also won't have to worry about workers using the methods of collective bargaining to raise issues. They can simply approach and settle things with ease.A transparent and well-structured process of collective bargaining benefits both labor and management by building long-term trust

Methods and process of collective bargaining is a vital topic as per several competitive exams. It would help if you learned other similar topics with the Testbook App.

Collective Bargaining Process Previous Year Questions

The system of collective bargaining as a method of settlement of industrial disputes has been adopted and provided under_______.

Options. A. The Industrial Disputes Act, 1947

• The Trade Union Act, 1926
• The Industrial Employment (Standing Orders) Act, 1946
• The Taft Hartley Act, 1947

Ans. A. The Industrial Disputes Act, 1947